Getting started in forex trading

Notice: This website does not purport to be a qualified source for forex trading information. Any forex trading material found on this website should be regarded as coming from an unqualified source unless otherwise stated. Nothing in this article should be considered advice. The article is based on research and has been written by a freelance writer who is in no way a forex trading expert.

How to get started in FOREX trading.

Study FOREX Trading first.

It is never a wise idea to jump into anything without having some idea of what you are getting into, and when there is money involved and the possibility to lose money, unless you have money that you can afford to lose, and even if you have money that you can afford to lose, risking your money on something you don’t understand is hardly smart. You might have heard that forex trading is a way to make money easily and quickly; but forex trading is also a way to lose money easily and quickly. According to the NFA (National Futures Association) the self-described “industrywide, self-regulatory organization for the U.S. futures industry”, forex trading carries significant risks. Becoming actively involved in forex trading without putting in enough time to educate yourself about the workings of the foreign exchange market can result in substantial loss of money.

Find a reputable brokerage

Once you have taken the time to learn all you can about forex trading and you feel confident that you are ready to start trading in a live environment you will need to create an account with a brokerage firm. There are plenty of brokerages out there that will provide a gateway to Forex trading. Many of these are internet-based and let you trade through your web browser. Some of them offer customized software that can help you analyze currency markets. With so many companies vying for your attention (and your deposit) make sure you visit many of them and study them. Make a list of the firms that you are interested in working with. Take note of their trading fees and minimum deposits. You might want to look for competitive fees if you plan on making many transactions. If you plan on trading for the long-term, the amount of fees might not be so important. But just because a firm is cheaper, doesn’t mean it is the best. Perhaps their software isn’t as advanced or maybe they don’t offer trading in as many currencies.

Once you have narrowed down your list to a few brokers, spend some serious time making sure they have a sterling reputation. Remember that in the number of scammers in the Forex arena has been on the increase in the past decade. Try to find reviews of the brokerage online and make sure that their current customers are happy. Try to contact one or two of their clients and ask their experiences.

Study the Market

Look for trends and follow the news. Understand how underlying economic forces will affect foreign exchange rates. Once the United States started running large budget deficits, many people realized that the dollar would sink. They used their economic analysis to make money by shorting the dollar.

If you aren’t doing your own analysis, but relying on technical analysis through software to prepare your trades, then become familiar with the software and study to understand how the technical analysis works. Make sure you are well versed in it before you begin trading. You may want to do some “practice trading” in a dummy account before you start using real money. There are a number of brokerages that allow you to practice with fake money.

Start Trading

Once you have followed the above steps, you should be ready to begin trading. You have studied Forex trading, have a reputable broker and are familiar with the market. You should now be able to place trades. Don’t expect to win every time, and don’t lose more than you can afford. You have now joined the millions around the world who participate in the Forex markets. Good luck!